This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.Need a new registration confirmation email? Click here

NewMarket Corporation Reports Record Results For The Year 2012

Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although NewMarket’s management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.

Factors that could cause actual results to differ materially from expectations include, but are not limited to: availability of raw materials and transportation systems; supply disruptions at single sourced facilities; ability to respond effectively to technological changes in our industry; failure to protect our intellectual property rights; hazards common to chemical businesses; occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; competition from other manufacturers; sudden or sharp raw materials price increases; gain or loss of significant customers; risks related to operating outside of the United States; the impact of fluctuations in foreign exchange rates; political, economic, and regulatory factors concerning our products; future governmental regulation; resolution of environmental liabilities or legal proceedings; inability to complete future acquisitions or successfully integrate future acquisitions into our business and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 1A, “Risk Factors” of our 2011 Annual Report on Form 10-K, which is available to shareholders upon request.

You should keep in mind that any forward-looking statement made by NewMarket in the foregoing discussion speaks only as of the date on which such forward-looking statement is made. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect the company. We have no duty to, and do not intend to, update or revise the forward-looking statements in this discussion after the date hereof, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that the events described in any forward-looking statement made in this discussion, or elsewhere, might not occur.

NEWMARKET CORPORATION AND SUBSIDIARIES

SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION

(In millions, except per-share amounts, unaudited)

Fourth Quarter Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Revenue:

Petroleum additives

$

511.2

$

499.0

$

2,200.8

$

2,126.5

Real estate development

2.8

2.9

11.4

11.4

All other (a)

2.2

3.7

11.1

11.7

Total

$

516.2

$

505.6

$

2,223.3

$

2,149.6

Segment operating profit:

Petroleum additives

Petroleum additives before gain on legal settlement, net

$

71.6

$

59.3

$

372.0

$

309.6

Gain on legal settlement, net (b)

0.0

0.0

0.0

38.7

Total petroleum additives

71.6

59.3

372.0

348.3

Real estate development

1.6

1.7

7.0

7.0

All other (a)

1.2

1.4

6.3

2.9

Segment operating profit

74.4

62.4

385.3

358.2

Corporate unallocated expense

(4.2

)

(5.2

)

(20.2

)

(16.7

)

Interest and financing expenses

(2.3

)

(4.7

)

(10.8

)

(18.8

)

Gain (loss) on an interest rate swap agreement (c)

0.3

(1.4

)

(5.3

)

(17.5

)

Loss on early extinguishment of debt (d)

0.0

0.0

(9.9

)

0.0

Other (expense) income, net

(0.4

)

(0.4

)

2.3

(1.5

)

Income before income tax expense

$

67.8

$

50.7

$

341.4

$

303.7

Net income

$

53.1

$

33.7

$

239.6

$

206.9

Basic earnings per share

$

3.94

$

2.51

$

17.85

$

15.10

Diluted earnings per share

$

3.94

$

2.51

$

17.85

$

15.09

Notes to Segment Results and Other Financial Information

(a)

"All other" includes the results of our tetraethyl lead (TEL) business, as well as certain contract manufacturing performed by Ethyl Corporation.

(b)

On September 13, 2011, we signed a settlement agreement with Innospec Inc. and its subsidiaries Alcor Chemie Vertriebs GmbH and Innospec Ltd. (collectively, Innospec) which provided for mutual releases of the parties and dismissal of the actions with prejudice. Under the settlement agreement, Innospec will pay NewMarket an aggregate amount of approximately $45 million in a combination of cash, a promissory note, and stock, of which $25 million was paid in cash on September 20, 2011 and $5 million was paid in the form of 195,313 shares of unregistered Innospec Inc. common stock. Fifteen million dollars is payable in three equal annual installments of $5 million under the promissory note, which bears simple interest at 1% per year. The first installment was paid in September 2012. The gain is net of expenses related to the settlement of the lawsuit.

(c)

The gain (loss) on an interest rate swap agreement represents the change, since the beginning of the reporting period, in the fair value of an interest rate swap which we entered into on June 25, 2009. We are not using hedge accounting to record the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.

(d)

In March 2012, we entered into a $650 million five-year unsecured revolving credit facility which replaced our previous $300 million unsecured revolving credit facility. In April 2012, we used a portion of this new credit facility to fund the early redemption of all of our outstanding 7.125% senior notes due 2016 (senior notes), representing an aggregate principal amount of $150 million. In May 2012, we used a portion of the new credit facility to repay the outstanding principal amount on the Foundry Park I, LLC mortgage loan agreement (mortgage loan). As a result, we recognized a loss on early extinguishment of debt of $9.9 million during the twelve months ended December 31, 2012 from accelerated amortization of financing fees associated with the prior revolving credit facility, the senior notes, and the mortgage loan, as well as from costs associated with redeeming the senior notes prior to maturity.

NEWMARKET CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per-share amounts, unaudited)

Fourth Quarter Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Revenue:

Net sales - product

$

513,322

$

502,698

$

2,211,878

$

2,138,127

Rental revenue

2,858

2,858

11,431

11,431

516,180

505,556

2,223,309

2,149,558

Costs:

Cost of goods sold - product

374,461

379,302

1,581,393

1,586,145

Cost of rental

1,183

1,183

4,386

4,386

375,644

380,485

1,585,779

1,590,531

Gross profit

140,536

125,071

637,530

559,027

Selling, general, and administrative expenses

39,506

39,784

154,209

151,602

Research, development, and testing expenses

31,276

28,768

117,845

105,496

Gain on legal settlement, net (a)

0

0

0

38,656

Operating profit

69,754

56,519

365,476

340,585

Interest and financing expenses

2,317

4,685

10,815

18,820

Loss on early extinguishment of debt (b)

0

0

9,932

0

Other income (expense), net (c)

402

(1,169

)

(3,338

)

(18,048

)

Income before income tax expense

67,839

50,665

341,391

303,717

Income tax expense

14,776

16,967

101,798

96,810

Net income

$

53,063

$

33,698

$

239,593

$

206,907

Basic earnings per share

$

3.94

$

2.51

$

17.85

$

15.10

Diluted earnings per share

$

3.94

$

2.51

$

17.85

$

15.09

Cash dividends declared per share

$

25.75

$

0.75

$

28.00

$

2.39

Notes to Consolidated Statements of Income

(a)

On September 13, 2011, we signed a settlement agreement with Innospec Inc. and its subsidiaries Alcor Chemie Vertriebs GmbH and Innospec Ltd. (collectively, Innospec) which provided for mutual releases of the parties and dismissal of the actions with prejudice. Under the settlement agreement, Innospec will pay NewMarket an aggregate amount of approximately $45 million in a combination of cash, a promissory note, and stock, of which $25 million was paid in cash on September 20, 2011 and $5 million was paid in the form of 195,313 shares of unregistered Innospec Inc. common stock. Fifteen million dollars is payable in three equal annual installments of $5 million under the promissory note, which bears simple interest at 1% per year. The first installment was paid in September 2012. The gain is net of expenses related to the settlement of the lawsuit.

(b)

In March 2012, we entered into a $650 million five-year unsecured revolving credit facility which replaced our previous $300 million unsecured revolving credit facility. In April 2012, we used a portion of this new credit facility to fund the early redemption of all of our outstanding 7.125% senior notes due 2016 (senior notes), representing an aggregate principal amount of $150 million. In May 2012, we used a portion of the new credit facility to repay the outstanding principal amount on the Foundry Park I, LLC mortgage loan agreement (mortgage loan). As a result, we recognized a loss on early extinguishment of debt of $9.9 million during the twelve months ended December 31, 2012 from accelerated amortization of financing fees associated with the prior revolving credit facility, the senior notes, and the mortgage loan, as well as from costs associated with redeeming the senior notes prior to maturity.

(c)

On June 25, 2009 we entered into an interest rate swap. The gain on the interest rate swap was $0.3 million for the fourth quarter ended December 31, 2012 and the loss on the interest rate swap was $5.3 million for the twelve months ended December 31, 2012. The loss on the interest rate swap was $1.4 million for the fourth quarter ended December 31, 2011 and $17.5 million for the twelve months ended December 31, 2011. We are not using hedge accounting to record the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.